The Foreign Investment and Real Property Tax Act is a federal law that requires foreign nationals to pay capital gains tax when they sell a U.S. real estate property. The IRS requires 15 percent (or sometimes 10 percent) of the sale price to be withheld at closing. This is required to cover any potential capital gains tax liability that may arise from the sale. Read on to learn about the latest FIRPTA updates.
When it comes to getting your refund from FIRPTA, the IRS will only release it in two ways. You can opt for a release via direct deposit to a U.S. bank account or a paper check in U.S. dollars. This can be a challenge for foreign nationals who do not have a U.S. bank account or who need to be physically present in the U.S. to initiate a wire transfer. To make the process smoother, we advise foreign sellers to keep their bank accounts open for as long as possible. Also, open a currency exchange account with a reputable provider such as Currencies Direct or MoneyCorp. These providers can help you move the money from your U.S. bank account back to your home country.
The IRS also requires foreign nationals to have a valid Individual Taxpayer Identification Number in order to receive a refund from FIRPTA. HBI can help you get an ITIN if you need one. Our six certifying acceptance agents are available to assist you.
IRS Processing Times
Currently, the IRS is making progress in processing refunds from FIRPTA, and withholding certificates for December 2021 and January 2022 are currently being issued. So, if you’re a foreign investor who sold at the end of 2021, you can expect to hear something from our FIRPTA team in the coming weeks.
We hope this blog post has been helpful in getting a better understanding of recent FIRPTA updates. If you have any further questions, please don’t hesitate to reach out to us or visit our website.